UAE consumers see Covid-19 affecting retail spending well into 2022, survey says

Widespread vaccinations key to restoring confidence in shopping at brick-and-mortar shops

Consumers remain cautious about spending, with their focus mainly on essential items such as food and beverage. istockphoto.com

Slightly under half (46 per cent) of UAE consumers expect the Covid-19 pandemic to affect retail behaviour well into next year as people focus on essential purchases, a survey by Kearney has found.

The study on consumer shopping habits said widespread vaccinations would be critical to encouraging consumers to shop in public retail spaces once more.

Another 28 per cent said protective and social distancing measures were crucial to restoring the confidence of shoppers.

Seventy-three per cent of consumers said they had altered their shopping habits during the Covid-19 pandemic, with the changes being more pronounced among women (81 per cent) than men (67 per cent).

Eight in 10 respondents between the ages of 30 and 45 reported that their shopping habits had changed, the highest of any age group. They were closely followed by those under 30 years (73 per cent).

“The pandemic has fundamentally changed the way consumers view health and safety measures and efforts,” said Debashish Mukherjee, partner and head of Kearney's consumer industry and retail practice in the Middle East.

“As residents adapt to the new normal, hygiene and hygiene transparency have become vital. Spending is being driven by the easing of restrictions, higher awareness of health and wellbeing and expectations of a return to the office.”

The value of the UAE's retail e-commerce market rose 53 per cent to a record $3.9 billion in 2020, largely driven by the digital shift in consumer shopping habits amid the Covid-19 pandemic, according to a report by Dubai Chamber of Commerce and Industry.

The study, based on data from Euromonitor, said e-commerce’s retail share will grow to $8bn by 2025. This will be supported by rising income, high internet penetration, well-developed logistics, modern digital payment systems, a tech-savvy youth and strong government support, according to Dubai Chamber.

However, consumers remain cautious about shopping, with their spending preference limited to essential items such as food and beverages.

Spending on non-essential items such as clothes, bags and accessories continues to decline, the survey found.

Discretionary spending dropped by 41 per cent while 34 per cent of respondents said spending on essentials was up more than 25 per cent.

Consumers were also shown to have a marked preference for high-quality essentials. About 16 per cent of respondents upgraded to more expensive products when it comes to vegetables, fruits and meat.

However, spending on non-essentials will probably recover, with 21 per cent of respondents saying that they expect to spend more on activewear (31 per cent), workwear (30 per cent), casual wear (20 per cent), footwear (20 per cent), evening wear (17 per cent) and accessories (8 per cent) in the coming months.

“For UAE consumers, convenience is driving online purchases, with Covid-19 concerns becoming a secondary factor, indicating the sustenance of the online shift,” said Mr Mukherjee.

“However, the physical shop still plays a strong role across all categories which require the customer to touch, feel and try the product.”